Here's how Rand Smith, the founder of coffee-bar chain Maine Roasters Coffee, competes with Starbucks by leveraging the Maine tradition of supporting locally owned businesses.
When Starbucks came to town, coffee-bar owner Rand Smith struck back, using the one weapon his massive, rich competitor couldn't deploy
This morning holds unusual promise for the flagship Starbucks coffee bar in Portland, Maine. The air is cool but not unduly so. By 8:15 the sun is streaking through clouds over the harbor a few blocks to the east of the store at Exchange and Middle streets. The spacious cafÉ, Starbucks Corp.'s first in Maine, has been in business for the past year. It occupies the ground floor of a five-story building, one of the tallest and grandest in the Old Port district of restored brick storefronts.
Sure enough, the burnished brown door at 176 Middle Street is soon swinging open and closed as patrons arrive to buy coffee. They nestle down at tables--11 in all--immersed in coffee aromas, or head for the door, bearing white cups imprinted with the familiar green-and-black Starbucks logo.
But on this April day, something is out of kilter at the Old Port cafÉ.
Two broken windows--large double-panes--greet this morning's customers. Although neatly patched with plywood and duct tape, the windows are unmistakable eyesores. On the sidewalk outside, two men in black baseball caps are hailing the Starbucks customers and other passersby. "Good morning," they warble. "Have a good day." And as they hand out little chocolate drops and paper napkins, they sing out, "Support a Maine-owned-and-operated company." Like the men's caps, the paper napkins are imprinted with the black, red, and white logo of Maine Roasters Coffee.
Soon a police cruiser comes to a stop on Middle Street near the shorter of the two men. A police officer rolls down the window on the passenger's side. "Quit breaking the windows," he hollers to John DeMarco, general manager of Maine Roasters Coffee. "That's not funny," DeMarco replies. The officer smiles and the cruiser drives off.
The scene on Middle Street captures the mood of a tense, bizarre drama that's unfolding in Portland, as the ambitions of Maine Roasters Coffee collide with the arrival of Starbucks in the city. Like Starbucks, Maine Roasters is in the specialty-coffee business, albeit on a vastly lesser scale; a "flea on a dog's butt," is how the smaller company's founder and president, Rand Smith, puts it. To compete with Starbucks, Smith has devised a counterforce strategy. It rests on the simple premise that in a state with a proud tradition of small locally owned businesses, people will respond to a "buy Maine" appeal. With its more than 2,000 high-profile outlets in 31 states, and more than 200 in 11 foreign countries, Seattle-based Starbucks is easily cast in the role of the heavyweight corporate outsider muscling its way into Maine.
The broken windows seem only to confirm Smith's instincts. Within a month this spring, during which Starbucks opened two new stores in Portland, vandals smashed the windows of one Starbucks store on four different nights. In the first incident, on March 18, a drunken man staggered out of a bar and pitched a bottle through one of the windows. He was arrested and pleaded guilty. The four attacks, however, says Portland police chief Michael Chitwood, apparently "targeted" Starbucks and were perpetrated by more than one vandal.
Others in Portland have expressed their antipathy without violence. Also this spring, a small group of young people protested at one of the newly christened stores in the city. One sign read, "Starbucks get out of town." A scathing column in a local newspaper, Casco Bay Weekly, inveighed against Starbucks for "quietly destroying the character of downtowns" and funneling its profits "back to the greedy mother ship." In an interview with Inc., Donna Peterson, a Starbucks regional marketing manager in Boston, said that the company's investment and operations in Portland have strengthened the economy and that the company has contributed thousands of dollars in products or cash to a variety of the city's charities.
The national chain has run into flak in other cities--"a push back from activists who don't want Starbucks in their town," noted company chairman and CEO Howard Schultz in his 1997 memoir, Pour Your Heart into It. But the extent of anti-Starbucks feeling in Portland is "unique," according to Todd Zappala, who oversees the 11 Starbucks stores in New England that are north of Boston. Like a fresh-faced candidate swept into office by an anti-incumbent populist wave, Maine Roasters stands to benefit from the hostility toward Starbucks. At least that's Smith's plan.
Next to Starbucks, Maine Roasters may feel flea-size, but Smith dreams big. He was thinking big before he hit upon specialty coffee as his ticket to riches. He had been "very serious" about starting a chain of hot-dog stores that would have stretched from Cleveland to Florida, he recalls, but scratched the concept because he found it to be flawed for various business reasons.
When he opened the first Maine Roasters coffee bar, in Yarmouth, Maine, four years ago, Smith did so as part of a far-reaching master plan. "Long-term objectives include the realization of 30-plus units" in Maine, New Hampshire, and Massachusetts, he detailed in an early business plan. Starbucks didn't then loom as even a distant threat in Smith's eyes. Portland's population of 63,000, he reasoned, provided too small a market to interest the coffee-bar giant.
When Starbucks rolled out plans for its Old Port store, early last year, he was stunned. By then Smith had managed to open only two of his own units: the one in Yarmouth, which he had relocated from its original site in a weathered mill to a former gas station on busy Route 1; and his stylish Portland site, a small storefront on a street known for its honky-tonk bars. In June 1998 Smith added a diminutive waterfront store on Nantucket Island off the coast of Massachusetts; and this summer he'll be unveiling a fourth, in Boston's theater district.
